Indeed, the cost of real estate is insane now. One metric used is the ratio of avg. home cost to median household income. And by that metric, it's high now (around 4:1),
...
But moreover, the sale price-to-median-income ratio in cities has just gone insane. It's now almost 10:1 in many cities. So while the average ratio for the whole country might not be very different, the cities have become unaffordable for anyone but the super-wealthy.
People pretty much everywhere and for decades now have, on average, been spending 1/4 to 1/3 of their income on housing and up to 1/2 if they wanted to live in locations with high demand.
You're confusing two
very different metrics.
Spending no more than 1/3 of your net income on housing is one rule of thumb. (Or half in very high cost areas, as you said.)
The ratio of house price and gross income is totally different, because a) it doesn't consider income tax, b) doesn't consider non-mortgage expenses like maintenance, insurance, etc and c) doesn't include the cost of financing. If you take a standard 30y mortgage on a $200K house, you actually end up spending about $400K on it by the end of the mortgage. If that $400K represents 1/3 of your net income, then it means the price of the house can't exceed around 1/6 of your net income.
Plus, of course, that averages don't tell the full story anyway.
It would be nicer if it was lower but I don't see anything wrong with it. Prime location real estate is limited and I see nothing wrong with the highest bidder getting it. So young people can't afford it? So what? We can't all have everything we want and we can't all live in prime locations. That is just life and the laws of physics.
Don't go telling people how life "is", it's just patronizing.
The young person who can't get it should feel happy for the other person who paid more and got it. It's not like there's lots of prime real estate sitting empty for years because the owner is asking too much. The owner gets what he can.
LMAO you are totally delusional. London has entire neighborhoods where the majority of homes are vacant because they've been bought by the rich foreigners as pure investment properties. No, the owners don't just "get what they can", because they aren't selling at all (though when they do, there's another rich foreign investor ready to buy). The result is reduced supply, raising the prices, and making it hard for people who actually need to live there to do so.
Same thing in Vancouver, BC, for example.
There are many factors that can distort the markets, and I don't think we should "feel happy" for people who benefit from this.
So home builders are not building what the market demands? Why is that? Because it seems to me they would be rather build what sells than what does not sell.
Um, no. They build what
makes them the most money, which doesn't necessarily align with what people would choose if they were building it themselves.
I don't like to see this modern attitude of "things are wrong and someone ought to do something about it because I deserve a comfortable life".
How on earth is that a "modern" attitude? People have always wanted things to be better. And that's a good thing.
So you can't get to live where you would prefer? Tough luck. Most people don't either. Everybody makes compromises.
And this means we can't voice the things we think should improve? Fuck off.
The world is as it is. If other people pay more for goods then they get them. That is how the world works.
I do not understand people who think they have inherent right to live better than previous generations. That is not how the world works. Sometimes things get better and sometimes things get worse.
The overall trend for humanity is one of constant improvement. It's not a pure straight line, but does this mean we should just shut up and take it? No, fuck off.
Now, I do agree that inequality is a problem. A serious problem which needs to be addressed. And it is not a simple problem to address. It needs a lot of understanding of the causes and how it might be ameliorated without causing bigger problems elsewhere.
And reducing inequality is not going to solve all problems. There are many problems that are structural and/or cultural. Retired people want to continue to receive pensions and benefits without regard to who or how they are paid. For decades old folks have been receiving in retirement much more than they put into the system but this is unsustainable in the long run.
Oh, so this is something we
can complain about? I thought you just wanted us to bend over and take it...
And I'd love to see where I said that reducing inequality will solve all problems...
Inequality should be reduced but this requires a responsible government with long term thinking and very careful planning which pretty much means it is not going to happen. It will be used in a partisan manner by all concerned but nothing effective will be done.
OK. So we can't discuss the situation, and explore its causes? Wouldn't want to be accused of whining...